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Short sales — when a bank takes less than what is owed on a home — have climbed nearly 25 percent in the last five months when compared to the same period in 2010. Median prices on those deals fell 24 percent.

Those numbers hardly sound like reasons to jump for joy. But experts say the housing market cannot recover until thousands of local homeowners get rid of their underwater mortgages, clearing a big backlog of distressed properties.

"This is good for the economy," said University of Central Florida economist Sean Snaith. "It helps get us to the other side. These houses have to go through this process."

Of course, there are downsides to all this.

In the short run, falling values put downward pressure on asking prices as sellers compete for buyers. In the longer run, though, buyers might actually find it harder to afford their dream home. As short sales move more houses, the best of them will get more offers, forcing buyers to pay more. Ultimately, the very definition of a recovered housing market is higher prices.

From July 2010 through November 2010, Tampa Bay lenders recorded 2,971 short sales with a median price of $112,000. In the same period this year, banks recorded 3,700 short sales with a median price of $89,900 in Pinellas, Hillsborough and parts of Pasco and Hernando counties, according to My Florida Regional Multiple Listing Service data.

"We're seeing enough positive growth (in the economy) that we'd expect to see these gains," said Scott Brown, chief economist with Raymond James in St. Petersburg. "It's still going to be a long recovery, but we'll take anything we can get at this point."

There's another sliver of good news from the rise in short sales. It shows banks increasingly are turning away from the more time-consuming process of paying thousands of dollars in legal fees to evict people through foreclosure. Critics have slammed lenders all year for not working faster to clear the backlog.

"This make more sense," said Chris Hounchell, a short sale specialist with Keller Williams Realty in St. Petersburg. "Banks are realizing that economic benefit to short sales. It's a quicker resolution than foreclosures."

Foreclosures in the Sunshine State must be approved by judges and take about two years.

"In Florida, foreclosures end up being big losers for banks because of the judicial process," Snaith said. "This is an evolution in the banks' thinking. It's a good thing."

Experts have been predicting that a tsunami of houses from the ''shadow inventory'' would decimate the market. That inventory includes homes with mortgages 90 days late and nearing foreclosure or homes already seized by a lender but not listed for sale .

Increasing short sales decrease the inventory.

While short sales have risen, foreclosure sales in the bay area plummeted from their peak of 1,549 in March to 505 last month, a 67 percent drop. The 505 sales last month is 23 percent lower than November 2010.

Hungry investors are now entering bidding wars on short sales because the supply of bank-owned homes is so low.

"The investors are all over these," said Craig Beggins, owner of Century 21 Beggins Enterprises in Apollo Beach. "They have no choice. This is going to cause the average prices to go up. The cheap houses are going away."

And short sales, experts say, are better for neighborhoods.

Houses listed as short sales tend to remain occupied until sold and hold higher values than those sold as a bank-owned foreclosures. Short-sale owners typically leave houses in better shape than people who are evicted. That helps maintain the value of neighboring properties.

Beggins, whose agents close 20 to 25 short sales a month, said the deals help homeowner associations clear delinquencies when the properties sell.

It's better for the housing recovery and the banks' bottom line if lenders don't flood the market with foreclosed homes, Beggins said, adding: "The lenders really have the control."

Lower prices could force home­owners who are not financially distressed to not list their homes for sale until the market improves. Currently, the region has about a six-month supply of homes. The lower the supply, the stronger the market.

Peter Murphy, president of Tampa's Home Encounter, a full-service real estate firm, said the short-sale increase is a double-edged sword for sellers.

"This sounds like a good idea for the banks," he said. "If they want to sell, they have to drop their price. Short sales are good for banks, but they're not really good for the housing market."

Brian Lamb, Fifth Third Bank's Tampa Bay president, said his bank would rather sell houses in short sales than seize them in foreclosure. "Our goal is to be fair to our customers," he said. "We absolutely want to work with our borrowers."

Although short sales are a more favorable option to foreclosure, lenders must approve them for hardship reasons and they typically take longer to complete than conventional sales. Agents says some lenders are starting to close in 45 to 60 days instead of a year or longer. Some offer cash to homeowners for moving expenses and waive the unpaid balances on their loans.

And not every owner has to be in default. Many lenders are allowing homeowners to be current on their payments while being approved for a short sale. Bank of America recently rolled out a program in Florida that offers between $5,000 and $20,000 to sellers who dump their houses in short sales.

For borrowers, the damage to a credit score is less severe with a short sale than a foreclosure. Borrowers can usually buy a new home within two or three years after a short sale whereas it can be longer with foreclosure, said Andy Wood of American Mortgage Services in Tampa.

He added: "A short sale sends a message that the owner worked with the lender to mitigate the loss to the bank."

Mark Puente can be reached at mpuente@tampabay.com or (727) 893-8459. Follow him at Twitter at twitter.com/markpuente.